Slide 1: 3Q 2016 Financial Results
3Q 2016 Financial Results November 1, 2016 Technology & Consulting Engineering & Construction Government Services Stuart Bradie – President and Chief Executive Officer Brian Ferraioli – EVP and Chief Financial Officer Lynn Nazareth – VP, Investor Relations
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements regarding our plans, objectives, goals, strat
Slide 3: Safety: Moving Towards Zero Harm
Safety: Moving Towards Zero Harm KBR is focused on an industry-leading commitment to employee safety. Over the last 21 months, KBR has achieved a 45% decrease in TRIR and a 19% increase in Zero Harm Days. Total Recordable Incident Rate (TRIR) Performance: 2011-YTD 2016 0.50 0.40 0.37 0.38 0.35 0.31
Slide 4: 3Q16: Highlights & Key Wins
3Q16: Highlights & Key Wins 3Q 2016 Highlights Key Strategic Wins • Underlying business continues to reflect strong • Army 2020: Expected to be signed shortly progress against strategic goals (4Q16 Backlog) • Completed acquisitions of Wyle and HTSI – full • Kuwait Base Operations and Security Suppor
Slide 5: Consolidated Results: 3Q 2016 vs 3Q 2015
Consolidated Results: 3Q 2016 vs 3Q 2015 Quarter Ending • Revenues reflect the deconsolidation of our ($ in millions, except EPS) Sep 30, 2016 Sep 30, 2015 Industrial Services business and the sale of our U.S. Infrastructure business ($132M in 3Q15). New Awards $ 498 $ 272 • Gross profit and equity
Slide 6: Effective Tax Rate (ETR)
Effective Tax Rate (ETR) Period ETR YTD 2016 43% 4Q 2016 (Forecast) 52% • The YTD tax provision reflects foreign taxes and approximately $6M in discrete tax credits resulting in an ETR of 43%. Not tax effecting U.S. losses for financial reporting purposes makes the ETR unusually high in 2016. • Assu
Slide 7: Technology & Consulting
Technology & Consulting • In 3Q16, T&C revenues were $67M which was 15% less than 3Q15 due to a lower proportion of proprietary equipment sales in the current OLEFINS REFINING ACID TREATMENT quarter. This trend reflects a mix of project revenues which start with license fees and engineering services
Slide 8: Engineering & Construction
Engineering & Construction • In 3Q16, E&C revenue was $595M (28% decrease from 3Q15) due to the deconsolidation and sale of the Industrial Services business in 3Q15 as well as reduced activity on several projects including one OFFSHORE LNG/GTL of the major LNG projects in Australia. LNG/GTL • Gross
Slide 9: Government Services
Government Services • In 3Q16, GS revenues were $401M (more than double 3Q15) due to the continued expansion of existing U.S. Govt contracts in 2016 as well as the APAC inclusion of approximately $200M of revenues EMEA from Wyle and HTSI during the quarter. • GS gross profit in 3Q16 increased by $24
Slide 10: Backlog: Transition in 2016
Backlog: Transition in 2016 Pro Forma • Including option years and assuming historical levels of task orders for certain contracts, GS backlog would be significantly higher than what is booked at 3Q16 • Booked and Pro Forma include ~$0.9B reduction from FX conversion rates in 2016 (GBP-USD) Backlog
Slide 11: Backlog: September 30, 2016 – Diverse & Reduced Risk
Backlog: September 30, 2016 – Diverse & Reduced Risk Backlog by Business Segment Backlog by Contract Type Lump Sum Govt E&C, Contracts Services Other Total KBR Backlog Cost At 9/30/16: Reimbursable, T&C PFI & Services $11.4B ($13.5) Contracts Backlog by Region Asia • Majority of KBR backlog is curre
Slide 12: Cash / Debt Position Post Wyle & HTSI Transactions
Cash / Debt Position Post Wyle & HTSI Transactions Cash: Balance at September 30, 2016 $569M Debt: Revolver Usage to Fund Acquisitions $650M Net Debt Position at September 30, 2016 $(81)M Permanent financing process expected to be completed in early 2017 12
Slide 13: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy Invest in Ongoing Business & Organic Pay Dividends Growth • Current dividend is • Focus on working capital $0.08/share • Maintain revolver and strong LC/ • Highest yielding dividend among bonding capacity peers • Divested / exiting under-performing • Returned $31
Slide 14: KBR: 2017 Outlook is Strong
KBR: 2017 Outlook is Strong • Higher proportion of earnings driven by differentiated professional services and technology in 2017 • Full-year impact of KBOSS, Army 2020 and MFTS contract awards • Full-year impact of Wyle and HTSI acquisitions • In Hydrocarbons markets, focus on industrial services,
Slide 15: Acquisition & Integration Update: Wyle & HTSI
Acquisition & Integration Update: Wyle & HTSI Close transactions: Both closed in 3Q16: Wyle on July 1 and HTSI on Sept 16th Align leadership: Leadership for the global Government Services segment consolidated under Roger Wiederkehr, former CEO of Wyle Align business: Business development and operati
Slide 16: 2016 Guidance
2016 Guidance • EPS range $0.30 - $0.50, excluding legacy legal fees (estimate for legacy legal fees is $15M or $0.11 EPS) – Guidance includes earnings accretion from Wyle ($0.05 - $0.08 per share) as well as acquisition and integration costs related to both the Wyle & HTSI transactions ($9.4M in de
Slide 17: Conclusion
Conclusion • Focused business strategy leading to growth in backlog: global provider of high-end, differentiated, professional services and technologies • Strong and growing long-term, annuity-type Government Services business as well as focused Opex-driven E&C business with large project capability
Slide 18: Appendix
KBR Appendix KBR weveiiver
Slide 19: Consolidated EBITDA Reconciliation: 3Q 2016
Consolidated EBITDA Reconciliation: 3Q 2016 Quarter Ending ($ in millions) Sep 30, 2016 Sep 30, 2015 Net income attributable to KBR ($63) $ 55 Add Back: Interest income (expense) $2 $2 Provision for income taxes ($12) $ 18 Depreciation & amortization $ 12 $ 10 Consolidated EBITDA ($60) $ 85 Note: EB